Commentary: Some 'one-percenters' aim to give back

Dan Morain of the Sacramento Bee. (Sacramento Bee/MCT)
Dan Morain of the Sacramento Bee. (Sacramento Bee/MCT)

It's easy to fume at corporations, banks and tycoons that seem to pocket ever more money at our expense. But heading into an election year, a few 1 percenters are contemplating giving a little bit back.

Billionaire Nicolas Berggruen and his Think Long organization in Beverly Hills rolled out a plan last week to right California by, in part, raising taxes by $10 billion. San Francisco investor Thomas Steyer is proposing to end a $1 billion business tax break and use the money to put people to work on energy and conservation projects.

Now, Molly Munger, a wealthy Los Angeles civil rights attorney and co-founder of the nonprofit Advancement Project, is stepping up with a measure that would raise income taxes by $10 billion a year for the direct benefit of public schools.

When Munger attended John Muir High School in Pasadena, California ranked fifth in per pupil spending. As parents of public school kids know, class sizes are up, electives are disappearing, and construction paper and pencils pass for art supplies.

"It is hard to be a Californian today and not feel shame and sadness that we live in the state where the schools are funded at 46th in the nation," Munger told me. Others place the state at 42nd. Any way you slice it, the ranking is not good.

Those of us who have spent decades writing about the wacky world of direct democracy know there's danger in writing about initiative concepts when they haven't qualified. Most go sideways, which is good because most are bad ideas. But Munger has a concept worth knowing about, and she has the money and connections to wage a $20 million-plus campaign.

Munger is the daughter of investor Charles Munger, Warren Buffett's partner at Berkshire Hathaway. A brother, Charles Munger Jr., financed initiatives that stripped California legislators of their power to draw their district boundaries. If it survives challenges by the Republican Party, the redistricting measure could in time help create a less dysfunctional Legislature.

I met Molly Munger in about 1980 when I covered the federal courts in Los Angeles and she was an assistant U.S. attorney. After spending five years prosecuting crooks, she went into corporate law, landing in the high-rise Los Angeles office of an international law firm.

Then came the Rodney King beating and 1992 riot.

"Outside my window, I could see vast stretches of Los Angeles that had been on fire. It was a wake-up call," Munger told me.

She quit high-dollar corporate law and became a staff attorney at the NAACP Legal Defense and Educational Fund. In 1999, she and four friends, including civil rights lawyer Connie Rice, created the nonprofit Advancement Project.

The organization, whose board includes entertainer and civil rights activist Harry Belafonte, has focused on voting rights, education funding and equality issues. In Sacramento, Advancement Project has lobbied for bills to combat bullying in schools, help foster children and grant high-achieving children of illegal immigrants eligibility for college aid, the DREAM Act.

California will spend about $50 billion on public schools this year. That's down from the $61 billion four years earlier. Munger, who intends to submit her initiative to the attorney general for initial review this week, proposes to generate another $10 billion a year.

Fifteen percent would go to preschools. The rest would go to public schools, including charter schools.

Anti-tax advocates will gag on a $10 billion income state tax hike. It would be a 20 percent increase on the $50 billion raised now in personal income taxes.

Munger and her consultants are still tweaking the numbers. But given California's progressive tax structure, couples whose yearly taxable income exceeds $5 million would have the largest increases. Their marginal tax rate would rise by 2.2 percent to 12.5 percent. People in the rarified world who make, say, $10 million pay an average state income tax bill of $1 million. A 20 percent hike would push that sum to $1.2 million.

People at the lower end would pay more, too, though the increase would be a smaller proportion of their income. A couple with taxable income of $85,000 pays about $3,200 now. Their tax bill could go up by $550, less than 20 percent.

Tax hikes are never easy sells. Reviews on Berggruen's proposal are mixed at best. He proposes to raise money for the state. Voters are more likely to favor tax hikes if the money will be spent locally. Munger is counting on this.

Her initiative would require that money be transferred directly to schools, bypassing state politicians and the maw that is the general fund.

Local school officials would be required to ask parents how best to spend the money. Most of the money – 70 percent – would be spread among all public schools, no matter whether they are in Davis, Beverly Hills or East Oakland. The money could not be used for teacher raises but could be used to hire teachers.

Schools would receive another $180 per student for material, technology and teacher training. Schools that serve low-income families, so-called Title I schools, would receive an additional $670 per student.

In the next few days, Gov. Jerry Brown will offer his own tax plan. No doubt, he will try to muscle the wealthy initiative promoters aside, knowing that if they all put their tax hikes on the ballot, the electorate will be more likely to reject them all.

The budget is in the red, again, requiring billions in automatic cuts. Brown and the Legislature could lop off a week from the school year. Many rich people will shrug. It won't affect them. But a few philanthropists who have benefited from living in California have decided to try to help. That's not a bad thing.

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